Title

Presentation

The Sherwin-Williams Company beats earnings expectations. Reported EPS is $2.35, expectations were $2.27.

Operator: Good morning. Thank you for joining The Sherwin-Williams Company’s review of first quarter 2026 and our outlook for the second quarter and full year of 2026. With us on today’s call are Heidi Petz, Chair, President and Chief Executive Officer; Ben Meisenzoll, Chief Financial Officer; Paul Lang, Chief Accounting Officer; and Jim Jaye, Senior Vice President, Investor Relations and Communications. This conference call is being webcast simultaneously in listen-only mode by accessing Newswire via the Internet at sherwin.com. An archived replay of this webcast will be available at sherwin.com beginning approximately two hours after this conference call concludes. This conference call will include certain forward-looking statements as defined under U.S. federal securities laws with respect to sales, earnings, and other matters.

Any forward-looking statement speaks only as of the date on which such statement is made, and the company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. A full declaration regarding forward-looking statements is provided in the company’s earnings release transmitted earlier this morning. After the company’s prepared remarks, we will open up this session to questions. I will now turn the call over to Jim Jaye.

Jim Jaye: Thank you, and good morning to everyone. The Sherwin-Williams Company delivered strong sales in a quarter characterized by heightened global uncertainty and persistent demand softness in most end markets. Our growth investments and ongoing new account and share-of-wallet initiatives continue to yield results, as sales exceeded guidance on a consolidated basis and in all three reportable segments. Consolidated sales grew by a high single-digit percentage inclusive of a low single-digit contribution from the Suvenil acquisition. Reported gross margin expanded by 90 basis points inclusive of a dilutive impact from Suvenil. This was the fourteenth quarter out of the last 15 quarters we have delivered year-over-year gross margin expansion.

Against a challenging prior-year comparison, SG&A increased by a mid single-digit percentage. Excluding the anticipated headwinds from our non-annualized acquisition of Suvenil, non-annualized operating costs and depreciation related to our new buildings, and foreign currency translation that we anticipated to unfavorably impact our SG&A as a percent to sales by approximately 100 basis points. Our full-year guidance of a low single-digit increase in SG&A remains unchanged. Adjusted diluted net income per share in the quarter increased by a mid single-digit percentage, and adjusted EBITDA increased by a high single-digit percentage. Net operating cash improved by 200 million dollars driven by an increase in net income and working capital being a lower use of funds.

Our full-year guidance for adjusted diluted income per share remains unchanged. We continue to execute our disciplined capital allocation strategy in the quarter by returning 773 million dollars to shareholders through share buybacks and dividends. We ended the first quarter with a strong balance sheet and a net debt to adjusted EBITDA ratio of 2.5 times. Let me now turn it over to Heidi who will provide some color on first quarter segment performance before moving on to our outlook and your questions.

Heidi Petz: Thank you, Jim, and good morning to everyone. I want to begin by thanking our more than 64,000 employees for executing our strategy in what remains a very challenging operating environment. We are continuing to deliver reliability, consistency, and solutions for our customers at a time when these are more valuable than ever. Our differentiation continues to widen the gap between The Sherwin-Williams Company and our competitors as evidenced by our strong top line and robust new account growth across the business. Looking at our segment results in the first quarter, I will begin with Paint Stores Group, which grew by a mid single-digit percentage. Price mix and volume both increased by low single-digit percentages, with price mix increasing more than volume.

Effectiveness of our January 1 price increase is trending slightly better than expected. Our protective and marine team continued to deliver impressive growth for us, as sales increased by double digits versus a high single-digit comparison. It was the seventh straight quarter of high single-digit growth in this business. In the commercial business, sales increased by mid single digits in what remains a choppy market reflecting our very targeted and ongoing share gain efforts. These efforts are also evident in residential repaint, which returned to mid single-digit growth in the quarter. Low single-digit growth in property maintenance was encouraging, while demand in new residential remained very challenging as we anticipated. Segment profit grew by low single digits with segment margin basically flat.

We opened 21 new stores during the quarter and, as planned, closed 27, or about half a percent of total PSG stores. As we have done for decades, we continually assess and optimize our store portfolio to drive profitability, strengthen operational flexibility, drive improvement in return on net assets employed, and ensure we maintain the highest level of service for our customers. We still expect to open 80 to 100 new stores for the year. Consumer Brands sales exceeded our expectations driven by high-teens growth from the Suvenil acquisition. Price mix and FX both increased in the low single-digit range, and volume decreased in the mid single-digit range. Group sales excluding Suvenil increased by low single digits driven by high-teens growth in Europe and high single-digit growth in our Latin America business.

Softness persisted in North America where sales decreased by low single digits. Adjusted segment margin increased driven by the strong top line with flow-through of 34.3%. In Performance Coatings Group, sales increased slightly above the mid single-digit range we expected, with growth in every division and region. These results reflect the strong new account growth focus we have spoken about over the last year as demand in our underlying core business is still declining in some end markets. Volume in the quarter grew by low single digits, acquisitions were slightly positive, price mix was flat, and FX was a tailwind. Automotive refinish sales increased by a low-teens percentage driven by high single-digit volume. The growth was broad based with sales up by double digits in all regions, providing further evidence of the value we are delivering in this end market to win new business.

Packaging continued its strong performance as sales increased by high single digits against a high single-digit comparison. General industrial, coil, and wood also delivered solid growth. Group sales expanded in all regions, including double-digit increases in Asia Pacific and Europe. Adjusted segment profit for the group increased by mid single digits and segment margin was flat. Higher incentive compensation related to the strong year-over-year sales along with the significant FX headwinds drove segment SG&A higher, resulting in muted flow-through. These same dynamics, in addition to our non-annualized new building costs, also drove SG&A higher within the administrative segment. The slide deck accompanying our press release this morning provides more detail on second quarter segment results.

Now moving on to our guidance. The assumptions we provided in our January call and slide deck largely remain intact. What has not changed is that our customer feedback as well as the indicators we track continue to signal little support for meaningful recovery in most end markets. What has changed is the Middle East conflict, which has added further complexity and uncertainty in navigating the macro landscape. Our team has repeatedly demonstrated its ability to manage through crises, most recently during the pandemic and the U.S. supply chain disruption to name just a few. I am highly confident we are well equipped to manage through this newest challenge and continue supporting our customers at the highest level. Let me provide some perspective here.

First, we expect to see some negative impacts on demand from recent events as the year progresses. It is difficult to predict the magnitude at this time given the highly fluid nature of the situation. But I will remind you that this is our fourth year in a row we have been operating with the benefit of getting no help from the market. We know we are operating in a share gain environment, and we will continue to be very aggressive here. We see opportunity in uncertainty. We will continue to support our existing and new customers by being the most reliable and consistent business partner in our industry. From a raw material perspective, our first objective is certainty of supply. The good news is that over 80% of our consolidated revenue is in North America.

The majority of raw materials for these sales are sourced in-region and remain largely insulated from supply disruptions tied to Strait of Hormuz volatility. In areas such as Asia Pacific and EMEA, where supply could become more challenged, we are managing risk closely. Our focus over many years on building strong relationships with strategic suppliers versus transactional ones is a competitive advantage and should continue to serve us well. In terms of raw material price/cost dynamics, costs for oil, natural gas, and key petrochemical feedstocks, such as propylene, have inflated and remain volatile. As we have previously indicated, sustained inflation in these commodities typically takes about a quarter or two before we begin seeing an impact in our P&L.

Specifically, we would expect to see these inflating costs impacting us more materially as we move through the second quarter and into the second half of the year. Our industrial business is seeing inflationary pressures first, starting in APAC and EMEA and to a smaller extent in North America. More recently, we have started to see the inflationary impact in our North and South American architectural businesses. This leads us to increase our full-year raw material inflation outlook to the range of up low to mid single digits. In this environment, we continue to focus on securing incremental volume balanced with appropriate and decisive pricing and cost-out actions that allow us to maintain the products, services, and supply solutions which drive productivity and profitability for our customers.

In terms of pricing, we are out across the business with incremental targeted actions by customer, geography, and end market. As a result, our expectation for consolidated price/mix for the year increases to the high end of our low single-digit range. We are actively working to limit these increases for our customers by accelerating meaningful and aggressive cost reduction actions. At the same time, we expect continued volatility in the raw material environment as the year progresses, and we are prepared to implement additional increases if necessary. The slide deck issued with this morning’s press release includes our expectations for consolidated and segment sales for 2026. Our consolidated sales and earnings guidance for the full year are unchanged, so our deck outlines some adjustments in the mix of volume, price, and FX.

The deck also contains other details you may find useful for modeling purposes. The Sherwin-Williams Company remains well positioned to outperform the market. We are highly confident in the clarity of our strategy and, importantly, our team’s deep experience and ability to out-execute in this environment. We remain deeply focused on the success of our customers, while continuously assessing and adapting to market conditions and controlling what we can. Whenever there is uncertainty and disruption, there is significant opportunity to demonstrate what makes The Sherwin-Williams Company so unique. This concludes our prepared remarks. With that, I would like to thank you for joining us this morning, and we will be happy to take your questions.

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Operator: We will now open the call for questions. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is from John McNulty with BMO Capital Markets.

John McNulty: Yeah, good morning. Thanks for taking my question. Maybe a question on the price and cost dynamic. It seems like on your pricing commentary, it sounds like it is a little bit more surgical than maybe you have taken in the past and a little more customer specific or very end market specific. I guess given the global cost pressures that we are seeing, why is it sounding maybe a little bit more surgical than usual and maybe a little bit less of a full across-the-board type price move? Can you help us to think about that?

Heidi Petz: Yes, John. I will start, and I will hand this over to Ben here for some color commentary. I do want to emphasize that this is an opportunity. We have operated through so many different types of cycles where volume is clearly key, and the discipline of the team to know when and where to go with pricing is on clear display. You see it in our first quarter results. But I want to take a moment before I hand this over to Ben. I said this in our prepared comments: it is a credit to our 24,000 employees globally that are operating belly to belly with customers and have that intimacy so that when we do need to take pricing, we have high credibility that it is absolutely out of necessity. I will hand it over to Ben to give some comments on a more surgical approach.

Ben Meisenzoll: Hey, good morning, John. Just to add to what Heidi said here, I think one place to anchor is that we have more than twice the pricing now in this new guide than what we had in the original guidance that we gave you in January. And it reflects, if you think about the phasing by the regions, we know that Asia Pacific is maybe more impacted right now. That is going to impact EMEA. North America comes later. You also have the phasing where industrial is impacted sooner than you would have architectural. That is because a lot of the solvent pricing that you would expect you see first. Even the way that we buy is a variable here. You think about we are like 50/50 between contractual and spot buying. More of our architectural business is on a contract, and so you would expect on the industrial side you are going to see more of that spot buying where you have a more varied range of raw materials.

These are all things that have gone into how we thought about the pricing here. And Heidi is absolutely right. We are going to monitor and watch. We are going to work with our customers. We are also really early in the year still, and so we have a lot of opportunity if our base case does not play out the way that we think. We are going to have that ability to go out and get additional pricing. And lastly, we always talk about it as balancing price with the right volume, and as we look at some of the competitive opportunities, we are not looking for all volume. That is an opportunity that we want to make sure that we do not forget about here.

Operator: Thank you, John. We do ask to please limit yourself to one question. If you have any additional, you may reenter the queue by pressing star one. Your next question for today is from Duffy Fischer with Goldman Sachs.

Duffy Fischer: Yeah. Good morning, guys. Just a question on cost. If you could kind of break that down a little bit where you have seen the increase and, you know, going from kind of low single digits to low to mid, what is that based off of vis-à-vis spot prices? Do you think that we put in the peak already for a lot of, you know, the VAMs, the propylenes, all that kind of stuff, and they are starting to roll over, or do you think they will continue to go up? And then just some help on what that increase is vis-à-vis what you think the market is going to show us over the several months.

Jim Jaye: Yeah. Good morning, Duffy. It is Jim. I would say where we are seeing the most pressure, as Ben mentioned, would be more on the industrial basket. So you are seeing that in the solvents and resins, those petrochemical-based commodities. Propylene drives about 75% of our basket, and that pricing is up because of the Middle East. It is forecasted maybe up 50% more through the rest of 2026 related to those disruptions. The solvents are elevated as well. Epoxies, I would say, as well. TiO2, for the most part, has not elevated as much yet. I think we have talked, Duffy, offline about the sulfur dynamics coming out of the Strait of Hormuz. The good news is we are not really buying sulfate TiO2. I understand it is a global market, but we are more on the chlorinated side, so I think that is important.

The other thing I would say is, again, Heidi mentioned in her remarks, over 80% of our sales are in North America and the vast majority of our raws that we are buying come from that region. So from a supply perspective, we feel very good. And the contractual buying that Ben mentioned, the way we buy, is also helping us navigate these initial headwinds. And thanks for the question.

Operator: Your next question for today is from David Begleiter with Deutsche Bank.

David Begleiter: Thank you. Good morning. This is a small thing. On your guidance for raw materials, you removed the term “select commodity inflation” from the prior quarter slide deck. Help us with what that meant and why that was removed? Thank you.

Jim Jaye: Yeah. I will take that one, David. I think when we talked about it earlier in the year, we just wanted to make sure that people were indicating that tariffs were part of it. We wanted to say, hey, commodities were moving a little bit as well. We just took that off now because it is very obvious that the commodities are moving upwards. So I would not read much into that. And thanks for the question, David.

Operator: Your next question is from Christopher Parkinson with Wolfe Research.

Christopher Parkinson: Great. Thank you so much. Heidi, you mentioned we have been consistently in that share gain environment over the last several years. Can you just give us kind of a quick update, given the current dynamics, on how you are thinking about gross spend, how you are thinking about net new store openings and closures? Just any dynamics that you could help us think about not only 2026, but also the trajectory which you still see for 2027 and 2028 would be particularly helpful. Thank you so much.

Heidi Petz: You bet. Good morning, Chris. You know, there is a lot of volatility obviously in the macro, but there is also a lot of volatility in the competitive environment. I also said in the prepared remarks, that is absolutely our opportunity. You are going to hear us talk about this jump ball environment. And so in this economy and in this competitive landscape, we are going to be extremely aggressive in making sure that we continue to take more than our fair share of volume. I will point to a couple examples here, and then I will come back to the stores and your second question. If you look at our res repaint segment, we are up mid single digits in a flat to down market. Focusing on a lot of these share gains, we see in interiors increasing some bidding activity.

We are going to take advantage of that. We see the exterior backlogs are very healthy. We are going to take advantage of that. Our team has been out laser focused. Justin Bins and the stores organization are committing to aggressive new account activity. I would tell you it is the strongest we have seen in a long time. So even though there is some slowing in the market, our teams are out chasing square footage, earning business with these contractors every single day. I would point to our commercial segment. We are outperforming. There are soft completions, and yet we are up mid single digits while completions are down double digits. Again, some good bidding activity out there. We see some positive signals that there is uptick with office tenant improvement.

Some modest uptick in multifamily starts that will not benefit us for at least 12 to 18 months. But we are up year over year all four quarters of 2025 and 2026 because we have been completely focused on demonstrating value with these contractors. Let me take a moment and give you a bit more by segment. If you look at our property maintenance, we are up low single digits here in a market where turns and CapEx were both under pressure. So we continue to be laser focused on how we can add value. Even in the DIY space, we are up mid single digits in stores. That premium DIYer is holding up a bit better than that value-conscious DIYer that prefers a home center environment. Our protective and marine business: seventh straight quarter of being up at least high single digits.

It is all share gains. And so we are going to be relentless in being very targeted on our strategic investments as we are obviously very focused on taking cost out on the admin side. But to your point on stores, it is going to be a continued disciplined process of looking at our portfolio. Ultimately, we are going to be driving a focus on return on net assets employed. It is incumbent upon us that as we are looking at that portfolio, as we have done for decades, we are going to make sure that we are driving profitability and strengthening our flexibility and our agility. As we see migration and changes in the competitive landscape, we are going to be very thoughtful in chasing that volume.

Operator: Your next question is from Ghansham Panjabi with Baird.

Ghansham Panjabi: Yes. Good morning. On the 2026 guidance, I think initially you had volumes up low single digits for your original expectation and then it seems like now it is guided towards low single-digit decline. Is the delta just your reflection of what you think the market will do the rest of the year just given this sequence of events? And then what are the offsets as it relates to the intact earnings expectations on the plus side? Thank you.

Ben Meisenzoll: Hey, Ghansham. On the volume piece, yes. I mean, you heard us talk about a lot of the stronger price that is coming through. We recognize that with some of the inflation that there is going to be a likely demand impact. And so I think what you see in our guide, keeping it full year in that same range, it is how we get there that is very, very different. We expect maybe volumes to be a little more muted. And you think through the consumer sentiment numbers. I mean, we have seen lowest levels on record even going back to GFC and COVID, we have seen prints that are much worse than that. Some of our guidance is baking in some of the expectation on that volume being softer there. And again, as we talked about on the prior question, price is obviously an offset to that, and that helps us get to that same kind of guide for the full year.

Operator: Your next question for today is from John Roberts with Mizuho.

John Roberts: Thank you. The current administration has turned its attention towards housing affordability. Do you see anything in the proposed actions that you think could help out the end markets materially?

Ben Meisenzoll: Hey, John. We have been monitoring, obviously, a lot of what they are doing. We agree that affordability is a big part of the equation. We have talked pretty openly that we thought rates were maybe going to be the first indicator that could drive additional unlocking demand, then affordability and consumer confidence. That may be more at the forefront. Our opinion is that we would like to see some more of the supply opportunities versus some more of the gimmicky demand. You have seen the 50-year mortgage. You have seen the “Trump homes.” You have seen some of these other maybe shorter-term unlocks. What we are looking for in some of these policy changes would be how do you get local governments working better with the federal government to open up land that makes it more cost effective for the new homebuilders to lower their costs.

That, I would say, has a trickle-down effect to the affordability piece for the consumer who is buying the home. We welcome, obviously, any of the unlocking of affordability-type mechanisms, and we are watching that closely to see how we should be reacting and be ready to act when you do see something.

Operator: Your next question for today is from Vincent Andrews with Morgan Stanley.

Vincent Andrews: Thank you, and good morning. Could you talk a little bit about the margin improvement in Consumer Brands? And I guess from a couple of different lenses? One, should we think about that as a base level? Typically, I believe those margins go up in the middle of the year. So will they be improving sequentially? And then was there any reallocation of costs among the three segments? I recall in prior years, sometimes at the beginning of the year, you have changed the cost allocation of, you know, the paint supply from Consumer Brands into the other two segments. Thank you.

Ben Meisenzoll: Hey, Vincent. On the first part of your question, the margin improvement in Consumer Brands that you saw, a lot of that is coming from our global supply chain efficiencies. We have talked many quarters about a lot of the simplification and continuous improvement culture that team has, and we continue to see benefits there. If you remember the second half of last year where our production was lower than what we had called out the first half of the year, that team is getting lean in a lot of different ways. That is a big part of what you see in the improved margin there. You also have some opportunities where our price mix has been a little bit better. You think about premium gallons improving in that segment and maybe a little bit of price ahead of some of the things Heidi and I have already talked about with inflation.

So you see that there in that part of it. There is no reallocation. I know back in 2023, we talked about how we had that fixed cost allocation between the businesses. Nothing here. You should expect to still see low-20s margin in this segment as we have talked about.

Operator: Your next question for today is from Mike Harrison with Seaport Research Partners.

Mike Harrison: Hi. Good morning. I was hoping that we could go back to pricing. It seems like maybe the realization that you are getting on that 7% increase from January 1 is a little bit better than you had initially thought. And I am curious at this point, have all of those conversations with customers taken place and the pricing is what it is, or are there still some conversations yet to happen? And in terms of potentially needing another increase in response to what is going on in the Middle East and higher raw material costs, has the window passed to announce a price increase ahead of this year’s paint season, or would you be willing to break tradition and go with a mid-season increase if that is what is necessary or if you see competitors doing that? Thank you.

Heidi Petz: Yeah, Mike. Good morning. I will start with—this is kind of a two-part question. The first part of your question relative to the January increase: yes, the realization is better than we expected, and yes, all of those conversations have happened and are out there. As it relates to has the window passed, or how do we think about maybe more of this turbulent environment? We have done this in the past. In fact, I did this when I was running stores. When you are in a more volatile environment, what we are not going to do is go out with a big increase in the middle of the season and announce “effective immediately.” But what we might do—if we need to go out with price, we will go out with price—in the middle or the beginning or the end of the season, but we will do it the right way.

We will sit down with our customers. We will make sure that they are prepared so they are not stuck absorbing this, and we can work with them to get those into their bids. We will do it very methodically. But let me be very clear: if we need to go again, we will go again.

Operator: Your next question for today is from Greg Melich with Evercore ISI.

Greg Melich: Hi. Thanks. I would love to dig a little deeper on the gross margin expansion in the first quarter, I guess the 90 bps. And what it would have been without the Suvenil degradation? And if you think about going forward, do you think gross margins could be up each quarter this year, year on year? Or does that volatility mean there could be some quarters where it contracts year over year? Thanks.

Ben Meisenzoll: Hey, Greg. You know, we have not been calling out the specifics with Suvenil, but I could tell you that it is a multi-basis-point level up. We would have been over a 100-basis-point improvement without Suvenil in the quarter. And then as you look forward to prior quarters, you do normally see our gross margins increase into the selling season as our sales improve and we get better cost/margin dynamics. There could still be a little bit of lumpiness. We have talked about—even with our midterm gross margin target—that it is not a straight line up, that it is a little bit lumpy. But we would expect that we continue to get a little bit of expansion there. Obviously, all the things that we are trying to manage through with the Middle East conflict and the raw materials, that plays into it as well.

But if, again, you look at the normal phasing quarter by quarter, you should expect us to see improved gross margins as we go into spring and summer selling season.

Operator: Your next question for today is from Arun Viswanathan with RBC.

Arun Viswanathan: Great. Thanks for taking my question. I guess I was a little bit pleasantly surprised by some of the volume comments and performance across a couple of your businesses. So maybe in PSG, still very strong, I guess, or relatively solid resi repaint. Do you see that continuing? And then in PCG, better-than-expected performance out of refinish and general industrial and coil turning around. Do you see those continuing as well? Thanks.

Heidi Petz: The answer is absolutely we see those continuing. And, Arun, I will point to res repaint—just a little bit more color on that. It is the actions that we have taken over the last three to four years that help. The Sherwin-Williams Company has never been better positioned. I would tell you we are better positioned now than even the turbulent last two, three, four years. The controllables mindset: residential repaint—this is an area where we are bringing really important innovation forward and technologies to help job site productivity. For example, we just launched a product system called Emerald Symmetry, which is our best performing interior product that we have ever produced. These performance characteristics are putting our contractors in a position to get on and off job sites faster.

The secondary benefit of something like this is it happens to be zero-VOC, a plant-based interior coating. So it helps us on a number of fronts. We are taking the time to make sure that we are setting our contractors up for success, and when we do that, we get rewarded. To your point on some of the important businesses in PCG—this does not happen by chance. We talk about success by design. You mentioned Refinish. We have very strong momentum here. We are up double digits in every region. We are getting price in, and I think that is a demonstration of a clear value proposition that customers are really understanding. There are a lot of dynamics certainly within the industry that we watch closely. But what we do not do is sit back and wait for the market to correct.

We are out chasing new business aggressively. Our direct install continues to grow double digits in the quarter, so there is a lot of runway in terms of future share gains there. Packaging—another fantastic example. We are up high single digits. The global beverage market is up low single digits. The global food market is flat to down low single digits. So if it tells you that we are up high single digits, what we are doing is working. Coil, general industrial, and wood all have really positive stories. The coil business—we are up mid single digits, and that is despite a lot of softness tied to the North American commercial/residential construction, tariff uncertainty. The teams are out aggressively hunting. GI is another great example.

General finish heavy equipment—they are both up double digits. We are out trying to offset core erosion and core softness there. And industrial wood being up low single digits despite the correlation to residential there—there are soft residential end markets that impact wood furniture, flooring, and cabinetry. Despite that backdrop, the team is out chasing. Here is the punch line: we are building new muscle. And I do expect that we will continue to keep our foot on the gas and take share.

Operator: Your next question for today is from Kevin McCarthy with Vertical Research Partners.

Kevin McCarthy: Yes. Thank you, and good morning. I had a clarification and a question. On the clarification side, Ben, I think you made a comment that the price embedded in today’s guide is more than twice what you had included last quarter. I guess the clarification was, is that all to do with the January 1 increase and the realization against that, or have you implemented incremental pricing since the onset of the war on March 1? And then just my question is on raw materials. You are ratcheting the guide up a little bit, although, frankly, not as much as I might have thought. So wondering if you could just talk about the quarterly cadence of that. I think you are a majority LIFO company, so maybe you can speak to the accounting flow-through and the assumptions that you are making on duration of the conflict there? Thanks.

Ben Meisenzoll: Hey, Kevin. To clarify on my price comment from earlier, that is on the consolidated pricing. That would have been everything that we did in January with stores, and everything new that we have done since then. You see in our guide that we took up our pricing in Performance Coatings Group. It goes back to the comment we made—industrial, with all the more solventborne-type raw materials, with the international locations, that is where we are seeing it first. That kind of phases into your second question of how you see the raw materials flowing through. In our updated guide to low to mid on a full year, you have to expect that in the first half of this year, even as we have some of the deferrals, you do not see it as much in the first half.

You are going to see it heavier in the second half. And as you exit the year, you are going to be at the higher end of that up low to mid single digits. We are managing that closely. As I mentioned earlier, we have enough price with what we see right now for what that inflation is. If the baseline changes, as Heidi mentioned, we are willing to go out and work with our customers to implement new pricing. There is plenty of time in the year to do that, and so that is how we are going to manage that.

Operator: Your next question is from Josh Spector with UBS.

Josh Spector: Yes. Hi. Good morning. To go down a similar line of questioning as Kevin: it is surprising to hear that at the exit rate you are talking about the high end to low to mid single digits on raws. I mean, we have math out there that says you could see raws up 20% in that range, and that seems more consistent with some of the competitor price increases that are out there. So I do not know if due to your North America exposure you would say that inflation is substantially less, or if how you are buying those raw materials and maybe some of the contracts either give you more protection for this year, so this is more of an early 2027 inflationary event that you would see, or if there is something that gives you more permanent kind of protection against some of that. Can you talk about that a little bit and help us understand maybe what is going on that is different for you guys versus some of your competitors?

Ben Meisenzoll: Josh, I cannot comment on how our competitors buy, but I can tell you—with, and Heidi called out, our strategic relationships with key suppliers—our procurement is maybe tighter than some of the others. We are using that as a strategic advantage so that we are not having to maybe pass as much price to our customers as some of our competitors might have to do right now who are not advantaged because of the way that their contracts are set up. We do have a number of spot buying arrangements. We are not seeing the exit rates in that 20% range that you are seeing. And again, I think you alluded to the mix of our business, the architectural and the industrial. That probably has some impact on that. And then again, I will point back to 50% of our business on contract. That is an advantage for us right now.

Operator: Your next question is from Analyst with Bank of America.

Analyst: Good morning, everyone. Heidi, you talked a bunch about the packaging. It has been brought up a few times, and clearly the numbers are really good. As we move into next year and we lap some of these regulatory shifts, how much of what you are accomplishing now is because of that catalyst? Do you expect you can continue to outgrow the industry this much, or would you expect growth to shift closer to that low single-digit level that the industry is kind of growing at?

Heidi Petz: It is an interesting question because I think based on our preferred technology and our position to be ready for a lot of what is coming—you know, I am sure the European Food and Safety Association’s ban on BPA is scheduled to take effect in Q2 of this year—and we are at the very front edge of that. So there is a nice tailwind there. It is going to continue to drive a lot more customer conversions, certainly first half this year, well into the back half and into 2027. I can tell you with confidence that no one is better positioned to ride that. So we do expect to see some significant wins here.

Jim Jaye: And, Matt, just to add to that, that conversion to the non-BPA—Europe you called out—but really if you look at Asia and LatAm, there is still a lot of room to run in those regions as well. And thanks for the question.

Operator: Your next question for today is from Chuck Cerankosky with Northcoast Research.

Chuck Cerankosky: Good morning, everyone. Could you talk a little bit about what you are looking at in terms of the mortgage environment, household formations in North America for the remainder of this year?

Jim Jaye: Yeah, Chuck, it is Jim. I think in terms of the mortgage rate environment for this year, we are not expecting it to move a whole lot. I think Ben referenced—if you dial back a year or so ago—we were putting a lot of emphasis on rates getting below that six number. I think that would help. But certainly, it is more about affordability as well. And it is sort of this triangle that we look at of rates, affordability, and incomes. We need all three of those to work in sync, if you will. In terms of where we go from household formations, it has slowed a little bit, but it is still a pretty healthy rate, and we expect that to continue. I would also point to—as we have talked about many times, Chuck—the structural deficit that is out there in terms of we have underbuilt for a long period of time.

Even if household formations do slow a little bit, there is tremendous pent-up demand that has to happen. Whether that is single family—if it does not come through that way, it is going to come through in multifamily. People have a need for a place to live, so we are well positioned on that multifamily side as well.

Heidi Petz: One piece I would add to that, Chuck: because of the depth of our position with a lot of these national homebuilders and exclusive partnerships, I do believe we will be uniquely rewarded as this pent-up demand starts to soften, because it is what we do right now in these partnerships. We said this on the supplier side. It is true with our customers. We want to be the strategic partner that is helping them solve for simplification, helping them solve for cycle time. The work that we are doing now—while it is masked in the market—when starts to move, I think we will be uniquely rewarded for that.

Operator: Your next question for today is from Patrick Cunningham with Citi.

Patrick Cunningham: Hi. Good morning. I just wanted to unpack the lower Performance Coatings sales volume guide. Have you seen any evidence of weakness quarter to date in order books or any indication that there was perhaps some pull-forward in March? And conversely, we have seen some fits and starts on stable to expansionary industrial activity, particularly in the U.S. Have you seen any areas of more positive underlying market growth?

Heidi Petz: No, I would not say that we are seeing any material shift there in terms of orders or timing from a pull-forward standpoint, but I will hand this over to Ben to give a bit more commentary on guidance.

Ben Meisenzoll: I think one way to think about it is we know that there is going to be this gap in feedstocks. You have had boats that are on the water 60 to 90 days from the start of a conflict, and so at some point, Asia and Europe are going to feel the squeeze a little bit more than maybe what they are seeing right now. I think what you see in our guide is a pretty realistic view that there is going to be an inflection point where getting those feedstocks is going to be tougher. That could have, obviously, a greater inflationary impact on the business there. We feel—as one of the big global companies—we are going to be able to get our customers’ product. It may come at a higher cost, so you may start seeing some people waiting for prices to come down, and that could have an impact on demand.

That is really what you see in our guide that has that there. I will call out—we have started to look at inflation not as an uncontrollable headwind but a variable we are actively managing. You start to see that with how we are looking at each of the different regions and that realistic view and our confidence for how we are going to support our customers.

Operator: Your next question for today is from Analyst with Jefferies.

Analyst: Hey. Good morning. This is Kevin Especk on for Laurence. Just in Performance Coatings, given the macro uncertainty, how would you characterize customer behavior? Are you seeing confidence around production schedules or more short-cycle ordering and hesitation to commit to longer-term orders? Thanks.

Heidi Petz: There is probably a mix if we are honest. On balance, I think there will be some prudence and people waiting to see where cost of capital is, but there is also a lot of confidence in the backlogs and the pipelines, and so it is really a mix across the board. But I think it is a portfolio. Importantly in that, while we would love for all segments to be up at all times across PCG, the reality is that we are going to be very focused on where the market is and make sure that we are best positioned for that run-up. We are going to continue to do what we do. Carl Jorgengrud in that organization runs with a very strong sense of agility and urgency, and you are seeing that play out right now. I think our strategy is clearly working. What we said we would do, we are doing it, and we are doing it better than we even thought. That is a result of that strategy.

Operator: Your next question for today is from Analyst with Loop Capital.

Analyst: Good morning. This is Zach Pacheco on for Gareth Shmois. Just another quick one on customer behavior. Do you get the sense of any prebuy taking place due to inflationary increases where customers are trying to lock in supply, or is this not really something you are seeing at this moment? Thanks.

Jim Jaye: We are not seeing that in this moment. Nothing material.

Heidi Petz: We are not at all concerned on that.

Operator: Your next question is from Mike Sison with Wells Fargo.

Mike Sison: Hey, good morning. Nice quarter. Heidi, it just feels like U.S. architectural paint demand in the U.S. has been structurally impaired. If this continues to the end of the decade, how do you think about strategy in this environment for even longer than we are seeing it? And then just curious on your 2026 full year, your sales guide for Paint Stores Group. Are we kind of tracking toward that down low single digits given how the housing market is shaping up this year?

Heidi Petz: So, Mike, two-part question. I will take the first part on demand and then hand it to Ben for guidance. I would not use the word “impaired.” I would say “under pressure.” But you can imagine when we are sitting in our conference rooms and boardrooms, we are looking at every scenario, including softer for much, much longer. I can assure you that we do have a whole host of multiple levers that we look at and contemplate. We do not want to have to pull some of those, and so we are going to do what we said we would do: control the controllables. We are going to look at this as a jump ball environment. There are a lot of gallons available and up for grabs right now. If I point to res repaint—you know this well—this is an area where not only do we continue to take share, but it is the area where we have the most share to gain.

Even in this environment, we are going to continue to outperform the market, and we are going to compensate for some of that core softness.

Ben Meisenzoll: Yeah. Mike, I will add to that. As far as our full-year guidance for Paint Stores Group, it remains aligned in that low single-digit range. You do not see as many of the variables changing as maybe you saw with some of the other segments. I think that is a barometer of confidence for us in how we are assessing the business there. But as we have talked about already, we will continue to make the right selling investments there. There could be different mix by the different segments that Heidi has walked through, but we feel pretty confident about our continued opportunities, especially with all the share gains that we have been after in Stores Group. That is why you see the guide remaining where it is at.

Operator: Your next question is from Analyst with Berenberg.

Analyst: Hello, good morning, and thank you for taking my question. I am interested in two areas where Sherwin has taken market share: refinish and the EMEA decorative market. What is it that Sherwin has to offer in refinish that its competitors do not? Is the aggressiveness on pricing something that has happened here? And any comments that you can give on EMEA deco as well? I think Sherwin has a relatively niche position in the UK and one or two other markets. Thank you.

Heidi Petz: Thanks. On the refinish side, I will take you—not to make this a history lesson—but I think context is really important here. If you look at the acquisition of Valspar a few years ago, you leverage the best of both. We have combined not only our controlled distribution platform with our automotive business and everything that we have to offer with the subject matter expertise of our reps that are embedded in these customers’ body shops. Then you layer in, with Valspar, the waterborne technologies that we have been able to bring together, and we really have created kind of a best of both in terms of the value proposition.

Ben Meisenzoll: On the Europe sales, Europe benefited from a reporting mix impact this quarter. Certain immaterial resin sales we had previously reported as part of Performance Coatings Group are fully integrated and reflected in our global supply chain, which is reported here in our Consumer Brands Group. So do not read too much into the much stronger reported sales. If you look at the core sales of Consumer Brands Group in Europe, it grew by more of a mid single-digit percentage if I exclude that resin classification. Similar to what we have seen in Europe, with the challenging environment, DIY being a more challenged part of the segment, I think you see that playing out here. Thank you.

Operator: Your next question for today is from Jeff Zekauskas with JPMorgan.

Jeff Zekauskas: Thanks very much. Is it fair to say that your architectural paint price increase happened at the very beginning of the year, but there have not been architectural increases since then? But in your industrial businesses, you have increased prices later in 2026. And I was wondering how much that might be—what those price issuances were? And then secondly, your description of raw materials—you said that 75% of your raw materials are related to propylene, and you said that propylene was up 50%. So would not that mean that your raw materials are up 37% to 38%, if you ignore timing?

Ben Meisenzoll: Hey, Jeff. I am going to take this first part here. I will let Jim answer the question about raw materials. The pricing phasing—you are right. Yes, our architectural price that we went out with in January, the intention before the conflict was that is the price that we needed for the year. If you go back to our initial raw material guidance of up low single digits for the year, we built that initial pricing based on that assumption that we made at that time. As you can imagine, we have a lot of architectural customers who are on contracts, so we have other points throughout the year. We have talked about our effectiveness getting better throughout the year as you hit those certain milestones where we are able to get more pricing.

But yeah, you are right. A bulk of that comes at the start of the year. Industrial historically has been all throughout the year at different times based on business needs, based on what the raw material basket is doing. I think what you have seen post–Middle East conflict—we have had to go out and reassess in all parts of the business. Even though there is not an announced general increase for Paint Stores Group, as we try to manage through cost-out and other simplification efforts, there might be some spotty other areas where we are able to get price without doing a full launch. Similarly with the industrial business, as you can imagine, in Asia and Europe where you have got pricing that has got to be 20% or higher to cover where you have the bigger part of the inflation happening, our teams are out by the business unit and geography getting coverage where they need.

Again, that would be bigger on industrial in APAC and in EMEA. There are still industrial impacts happening in The Americas, and so there is pricing that is going out there on the industrial side. But I think, as we have talked about on a couple of different questions and even in Heidi’s opening remarks, being very surgical in trying to find where we can take that price without having to be generic because we realize right now in this inflationary environment we do not want to put volume at risk. You have to do that maybe to a stronger degree than you normally would see us do. And our confidence is that being very thoughtful about chasing volume in this environment—with the right programs, we are trading these contractors up because of the ability to get them on and off job sites faster, the ability for less touch-up required.

They are willing to pay a premium for that even in an inflationary environment because 85% of their cost is labor. We are being very thoughtful to get the volume, and it has to be the right volume.

Jim Jaye: And then, Jeff, on your question about propylene, I would give you a couple things to think about. The 50% that I mentioned is a forecast of where it could go perhaps over the rest of the year. We will see how that plays out, and as Ben mentioned here, we will be out with price if we need to. The other thing I would say is, as you know, we are not buying propylene. We are buying the things that are derivatives of propylene. Those do take some time to flow into our basket, and we will be ready again if we need to go out with additional surgical price increases. We will be prepared to do that. And thanks for the question.

Operator: We have reached the end of the question and answer session, and I will now turn the call over to Jim Jaye for closing remarks.

Jim Jaye: Yes. Thank you, Holly, and thank you again, everyone, for joining our call. And special thanks to our employees for their hard work in delivering a really solid start to our year. I think Heidi said it well. Our strategy is clear. It is working, and it is not changing. We are continuing to focus on providing our customers with solutions that make them more productive and profitable. You can count on us. We are going to continue executing at a high level, focusing on winning new business, and controlling what we can. I will close with a reminder: our 2026 financial community presentation is coming up in Cleveland this year, September 24. You will have an opportunity to see our investments in our new global headquarters and our global technology center.

We are excited for all of you to experience that and see how that is moving the needle forward for us. So thanks again for your interest in The Sherwin-Williams Company. As always, we will be available for follow-up calls. Hope you have a great day. Thank you.

Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.

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